A-10286, DECEMBER 17, 1925, 5 COMP. GEN. 435

A-10286, DECEMBER 17, 1925, 5 COMP. GEN. 435

CONTRACTS, INCREASED COSTS - ADDITIONAL PAYMENTS FOR DELIVERY BY EXPRESS WHERE A CONTRACT REQUIRED DELIVERY OF MATERIAL TO THE GOVERNMENT AT THE CONTRACTOR'S OWN RISK AND EXPENSE, A REQUEST MADE BY THE GOVERNMENT FOR SHIPMENT BY EXPRESS AT A TIME WHEN THE CONTRACTOR WAS IN DEFAULT AS TO TIME OF SHIPMENT MUST BE CONSIDERED AS A PROPER DEMAND UPON THE CONTRACTOR AND NOT ONE AS FAVORING THE UNITED STATES AS REQUESTING SOMETHING WHICH THE CONTRACTOR WOULD NOT OTHERWISE HAVE BEEN REQUIRED TO DO UNDER THE TERMS OF THE CONTRACT. AS THE CONTRACT DID NOT PROVIDE FOR LIQUIDATED DAMAGES THE ADDITIONAL COST INCIDENT TO THE MORE EXPEDITIOUS MEANS OF DELIVERY CONSTITUTES ACTUAL DAMAGES RESULTING FROM THE CONTRACTOR'S DELAY IN THE MATTER OF SHIPMENT AND FOR WHICH THE CONTRACTOR IS LIABLE.

DECISION BY COMPTROLLER GENERAL MCCARL, DECEMBER 17, 1925:

THE CRUCIBLE STEEL CO. OF AMERICA, BY LETTER DATED JUNE 13, 1925, APPLIED FOR REVIEW OF SETTLEMENT NO. 021828, DATED JUNE 17, 1924, DISALLOWING ITS CLAIM FOR $5,917.94, DEDUCTED BY F. G. PYNE, NAVY DISBURSING OFFICER, FROM PAYMENTS MADE UNDER CONTRACTS NOS. 57478 AND 57482, DATED APRIL 4, 1923 (DEDUCTIONS, RESPECTIVELY, OF $2,008.04 AND $3,909.90), TO COVER THE AMOUNT OF A DISALLOWANCE IN THE ACCOUNTS OF COMMANDER C. G. MAYO OF CREDIT FOR $5,917.94 PAID UNDER CONTRACT NO. 34480, DATED JANUARY 22, 1918, AS DIFFERENCE BETWEEN EXPRESS CHARGES AND FREIGHT RATES ON A QUANTITY OF STEEL FORGINGS SHIPPED BY EXPRESS FROM CLAIMANT'S PLANT TO THE MARE ISLAND NAVY YARD.

BY THE CONTRACT OF JANUARY 22, 1918, THE CONTRACTOR WAS REQUIRED TO FURNISH AND DELIVER AT MARE ISLAND NAVY YARD, AT ITS OWN RISK AND EXPENSE, 30 FORGINGS UNDER ITEM 2 AND 14 FORGINGS UNDER ITEM 4, SHIPMENTS TO BE MADE AS FOLLOWS:

DELIVERIES:

TO MAKE THE FIRST SHIPMENT OF ONE-THIRD, OR 10 FORGINGS, 1 MARCH, 1918, AND 10 FORGINGS EACH THIRTY DAYS THEREAFTER. ITEM NO. 4 TO BE FURNISHED 1 MARCH, 1918.

THE LIQUIDATED DAMAGE PROVISION CONTAINED IN PARAGRAPH 3 OF THE PRINTED FORM OF CONTRACT APPEARS TO HAVE BEEN ELIMINATED PRIOR TO EXECUTION OF THE CONTRACT; THEREFORE THE CONTRACTOR WAS CHARGEABLE WITH ACTUAL DAMAGES RESULTING FROM ANY DELAY IN MAKING SHIPMENTS IN ACCORDANCE WITH THE CONTRACT STIPULATIONS, SUPRA.

BY LETTER DATED FEBRUARY 23, 1918, THE NAVY DEPARTMENT INFORMED THE CONTRACTOR OF THE URGENT NEED FOR THE FORGINGS UNDER THE CONTRACT, REFERRED TO INFORMATION GIVEN AN ASSISTANT INSPECTOR BY CONTRACTOR THAT THE FORGINGS WOULD BE READY FOR INSPECTION APRIL 1, 1918, AND REQUESTED TO BE ADVISED WHETHER THAT DATE COULD BE EXPEDITED. IT IS REQUESTED TO BE ADVISED WHETHER THAT DATE COULD BE EXPEDITED. IT IS TO BE NOTED THAT THESE FORGINGS WHICH THE CONTRACTOR STATED, LATE IN FEBRUARY, WOULD BE READY FOR INSPECTION APRIL 1, 1918, WERE REQUIRED UNDER THE PLAIN TERMS OF THE CONTRACT TO BE SHIPPED MARCH 1, 1918; AND IT WAS WITH REFERENCE TO THIS DELINQUENCY THAT THE CONTRACTOR REPLIED MARCH 1, 1918, THAT WHILE IT COULD NOT THEN GIVE A DEFINITE DATE OF SHIPMENT IT WOULD "DO EVERYTHING POSSIBLE TO ANTICIPATE THE PROMISE ORIGINALLY GIVEN.' UNDER DATE OF MARCH 5, 1918, THE NAVY DEPARTMENT ADVISED THE CONTRACTOR AS FOLLOWS:

REFERRING TO MY LETTER 16790-WBP-ES OF FEBRUARY 23, 1918, AND YOUR REPLY TO IT, DATED MARCH 1, 1918.

I HAVE RECEIVED ANOTHER TELEGRAM FROM THE MARE ISLAND NAVY YARD, ADVISING ME THAT DELIVERY OF FORGINGS BY APRIL 1ST IS THE LATEST DATE POSSIBLE, WHICH WILL NOT DELAY COMPLETION OF THE DESTROYERS FOR WHICH THESE FORGINGS ARE REQUIRED.

I AM REQUESTED TO HAVE SHIPMENT MADE BY EXPRESS. PLEASE THEREFORE SHIP THIS MATERIAL VIA EXPRESS AFTER IT HAS BEEN INSPECTED AND PASSED.

KINDLY INFORM ME WHETHER OR NOT YOU CAN PROMISE TO HAVE THESE FORGINGS READY IN TIME, SO THAT, IF ACCEPTED, THEY CAN BE SHIPPED AND REACH THE MARE ISLAND NAVY YARD BY APRIL 1ST.

PLEASE GIVE THIS YOUR IMMEDIATE ATTENTION.

SHIPMENTS WERE MADE BY EXPRESS, BUT OF THE 24 FORGINGS WHICH THE CONTRACT REQUIRED TO BE SHIPPED MARCH 1, 1918, NONE WAS SHIPPED UNTIL APRIL 6, 1918, AND THE LAST OF SAID FORGINGS WAS NOT SHIPPED UNTIL MAY 18, 1918. OF THE 10 FORGINGS REQUIRED TO BE SHIPPED MARCH 31, 1918, NONE WAS SHIPPED UNTIL MAY 21, 1918, AND NONE OF THE LAST 10 OF THE FORGINGS WHICH WERE REQUIRED TO BE SHIPPED APRIL 30, 1918, WAS SHIPPED UNTIL JULY 23, 1918, AND SAID SHIPMENTS WERE NOT COMPLETED UNTIL AUGUST 21, 1918. IT IS EVIDENT, THEREFORE, THAT THE NECESSITY FOR THE SHIPMENTS BY EXPRESS INSTEAD OF FREIGHT WAS CAUSED BY THE FAILURE OF THE CONTRACTOR TO HAVE THE FORGINGS READY FOR SHIPMENT ON THE DATES STIPULATED THEREFOR IN THE CONTRACT. THE REQUEST FOR SHIPMENT BY EXPRESS WAS NOT MADE UNTIL FOUR DAYS AFTER MORE THAN ONE-HALF OF THE FORGINGS SHOULD HAVE BEEN SHIPPED, AND NO ACTUAL SHIPMENTS WERE MADE BY THE CONTRACTOR FOR MORE THAN 30 DAYS THEREAFTER, AND NO DELIVERIES WERE EFFECTED BY THE EXPRESS SHIPMENTS AT AN EARLIER DATE THAN THEY WOULD HAVE BEEN EFFECTED IF SHIPMENTS HAD BEEN MADE BY FREIGHT ON THE DATES STIPULATED IN THE CONTRACT. ACCORDINGLY, THE CONTRACTOR BEING IN DEFAULT AS TO TIME OF SHIPMENT, THE REQUEST OF THE NAVY DEPARTMENT FOR SHIPMENT BY EXPRESS MUST BE CONSIDERED AS A PROPER DEMAND UPON THE CONTRACTOR AND NOT ONE AS FAVORING THE UNITED STATES AS FOR SOMETHING THAT THE CONTRACTOR WOULD NOT OTHERWISE HAVE BEEN REQUIRED TO DO. AND THE ADDITIONAL COST INCIDENT TO THE MORE EXPEDITIOUS MEANS OF DELIVERY CONSTITUTES ACTUAL DAMAGES RESULTING FROM THE CONTRACTOR'S DELAY IN THE MATTER OF SHIPMENT AND FOR WHICH THE CONTRACTOR WAS LIABLE UNDER THE CONTRACT.

THE SO-CALLED SUPPLEMENTARY AGREEMENTS OF JULY 3, JULY 20, AND AUGUST 15, 1918, PURPORTING TO AUTHORIZE PAYMENT OF THE CONTRACTOR OF THE DIFFERENCE BETWEEN FREIGHT AND EXPRESS CHARGES ON THE SHIPMENTS, WERE WITHOUT CONSIDERATION MOVING TO THE UNITED STATES AND COULD NOT OPERATE TO IMPOSE ANY LEGAL OBLIGATION ON THE GOVERNMENT. SEE 2 COMP. GEN. 69; 26 COMP. DEC. 87.